It’s not every day that we see swift-water rescue teams with rafts and jet skis working on Los Angeles streets and in UCLA parking garages. On July 29, a major rupture of a water main under Sunset Boulevard in Westwood sent a geyser soaring 30 feet into the air, forming a sinkhole seven feet deep, and wasting 20 million gallons of water— enough to serve 155,000 people for a day. “Unfortunately, UCLA was the sink for this water source,” said Gene Block, chancellor of the University of California at Los Angeles. Several hundred commuters found themselves stranded in the rising water and mud, and the Los Angeles Fire Department rescued five people, including one who was swept under his car.

The cost of repair and cleanup—to say nothing of the loss of water—is expected to top tens of millions of dollars, including at least $1 million to replace the hardwood floor at UCLA’s Pauly Pavillion. University officials say they will send a bill to the Los Angeles Department of Water and Power, which is responsible for maintaining the city’s aging plumbing system. But in reality, it will be L.A.’s ratepayers, and ultimately California’s taxpayers, who will foot the bill.

Fixing L.A.’s century-old water pipes, according to DWP officials, could take 300 years. “That’s probably longer than we would like it to be and we will be looking at all of our infrastructure, in light of this incident,” DWP Senior Assistant General Manager Jim McDaniel said at a news conference. Several Los Angeles city council members have called for fast-track pipe replacement to improve reliability and avoid another Westwood flood.

We’ve been down this road before, with officials calling for aggressive repair schedules following previous pipe-rupturing incidents. But faster repairs, the DWP insists, will be possible only if the city accepts another water-rate hike—a tough sell for Angelenos, already struggling to keep up with high living costs. L.A.’s water rates have increased 45 percent in the past two years because of the state’s historic drought and the cost of imported water, plus the price tag associated with the state’s ultraviolet water-treatment plan. DWP officials say those rate hikes don’t cover capital costs, such as replacing 100-year-old pipes. “It’s important to remember when we get a rate increase, we borrow off that money, and that rate increase then funds the debt service on that 30-year borrow,” DWP General Manager Marcie Edwards said during a presentation at the city council’s energy and environment committee. The more complicated problem, staff suggested, is figuring out how to spread the estimated $4 billion cost of updating the city’s 7,200 miles of aged pipes, without unfairly saddling today’s ratepayers with costs. “It’s not going to come without any expense, but we really need to focus on how we are going to queue the order of these improvements,” said committee chairman and 7th District Councilman Felipe Fuentes during a meeting.

The water-main rupture comes at a time when some city officials have been trying to curb the power of the DWP. Los Angeles mayor Eric Garcetti vowed to reject any rate increases this year, declaring in his first State of the City address that the utility “must earn back your trust.” Garcetti alluded to billing problems that have plagued the utility, which resulted in some inflated and late bills. “Look, we can’t ask you to pay more for your water and power when the DWP screws up your bill,” the mayor said.

The DWP is one of the lowest-regarded companies in the country, according to the American Consumer Satisfaction Index. Earlier this year, auditors found that the DWP consistently fails to address hazards in a timely manner. The agency overspends, overcompensates, and underperforms relative to other utility companies. For example, according to records, the DWP had fallen far short of its goal of replacing 5,000 aging power poles a year, every year, since 2007. In 2013, the DWP replaced only 1,200 of the city’s power poles. Of the 320,000 power poles under the department’s jurisdiction, half are over 50 years old and more than 87,000 have already exceeded the industry-standard 60-year life span. DWP puts the cost of replacing each power pole between $21,000 and $42,000. Yet Pacific Gas and Electric, a private utility that serves much of northern and central California, reports spending $11,000 on average to replace its power poles.

Transparency and accountability are not hallmarks of the DWP, thanks in large part to unfettered union power. City leaders are battling with DWP’s union, the International Brotherhood of Electrical Workers Local 18, to release financial records of a nonprofit trust, run jointly by labor- and management-appointed trustees, that has run through $40 million in ratepayer money. Brian D’Arcy, IBEW Local 18’s business manager, has refused to turn over the trust’s financial records, and DWP executives have said they don’t know how the money was spent.

Union power also helps account for DWP’s extraordinary salary and benefits structure. According to PA Consulting, the average salary for DWP meter readers was 43 percent higher than those at 13 other utilities, including Pasadena Water and Power and PG&E. In fact, the DWP is among the most generous government agencies in Los Angeles. PA Consulting found consistently higher pay at DWP for jobs ranging from customer service to cable splicing. In the first six months of 2013, over 35 percent of DWP employees made more than $50,000 in base salary. Custodians at the DWP are eligible for a base pay 26 percent higher than those working at City Hall. DWP garage attendants make 20 percent more on average than their counterparts at other city-owned garages. In 2013, more than 86 percent of DWP workers earned above their approved base pay, with an average 16.6 percent bump in pay.

Cheaper alternatives exist, but unless the government monopoly is broken, Los Angeles residents will get stuck with the bill every time decrepit infrastructure causes a pipe to rupture. The status quo just isn’t working.


City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).

Further Reading

Up Next